Unlike his coeval among travel writers, Paul Theroux, Colin Thubron has never had the acclaim for his fiction that he deserves. To point it out bluntly like this reinforces the impression of inexplicable failure, but I am constantly astonished when admirers of his melancholy, passionate travel books express surprise to learn that Thubron has written novels at all.

They should check out at least, among his six previous fictional works, A Cruel Madness (1984). In a close tie with Patrick McGrath's Asylum, it ranks as the best English novel about mental illness of the last few decades. That may not seem like much of an accolade until you consider how problematic a novel with such a subject might be - what difficulties one could run into presenting a very disturbed consciousness. Thubron's great triumph in that novel was to engineer a particular impression in the reader's mind (a particular conception of reality) and then disturb it actively. If this didn't exactly put readers in the same position as the mentally ill, it at least showed us that sane/insane is not the clinical demarcation that some would have us believe. Instead, one came away from the novel alert to an idea of competing realities.

Perhaps alerting us to that idea is one of the jobs of novels. And (though maybe in a slightly different way) of novellas, such as Thubron's new production, To the Last City. It is set in the South American jungle, and the title immediately invites comparisons with The Lost World, Conan Doyle's romp involving Professor Challenger's search for a lost Inca city. The author of the Sherlock Holmes stories was capitalising on a tradition of jungle exotic that was already well established through colonial adventure stories. Others would follow in more recent times, adding their own spin as their personal predilections dictated: VS Pritchett's Dead Man Leading (a perfectly pitched adventure novel), Redmond O'Hanlon's In Trouble Again (a non-fictional comic take), and Alan Jenkins's long poem "Greenheart" (James Bond meets Gawain and the Green Knight ).

Thubron's book plugs very neatly, and knowingly, into this tradition, yet it is - as the jacket ungraciously puts it - "a novel which can be read on several levels". Apart from giving comfort to elevator operators everywhere, To the Last City works as both a deconstruction of its genre and an incisive psychological study along the lines of A Cruel Madness.

The action describes the passage of five unlikely travellers, along a "barely traceable path" to Vilcabamba, final citadel of the Incas. It was to here that the beleaguered civilisation retreated under the onslaught of the conquistadors. It is to here that Thubron's travellers wend their way, piling up a weight of expectation. Among them are Francisco, a Spanish seminarian racked with colonial guilt and feelings of failure, and Robert, an English writer who stands in, perhaps, as an authorial persona.

We hear of the twin poles of jungle exotic. Out of Europe come Spanish cruelties, quoted by Francisco from historical accounts: "They take two or three thousand Indians to serve them and carry their food and fodder, heavily loaded in shackles and dying of hunger. When Indians grew exhausted, they cut off their heads without untying them from their chains, leaving the road full of dead bodies..."

Out of America come Inca customs, noted by Robert, who discovers a mummy: "He was looking down on an embalmed husk. All the internal organs of such corpses had been extracted through the anus or vagina, leaving only these airy shadows . . . In embalment even the brain - the seat of memory - trickled down as liquid through the body, to be absorbed by the cotton pad on which the corpse sat. So everything a person was, his whole remembered past, became condensed to a cotton tampon."

Robert's partner, Camilla, is tough, quiet and unaccomodating. Then there is Louis, the Belgian architect whose "eyes bulge heavy in a watchful face" and Josiane, his doll-like wife. As they make their way through the foliage, led by a half-Spanish, half-Indian guide ("how could the man endure...the fragmentation in his soul?"), the tensions among the tourists are slowly teased out.

A former journalist, "always a bit too maverick to hold" as he shifts from paper to paper, Robert has a problem with emotion. And with completion. He can't write the "resounding book" that will make his name - for which, again, he is taking notes even as they travel. Camilla is distracted from him, harbouring a resentment he can hardly understand; he feels it "rising like a vapour" as they lie side by side in the tent, looking at the "vision of leaf-shadows" stencilled on its fabric.

So, in the warped course of jungle journey-time (which Thubron captures excellently), Robert is attracted to Josiane, whose lipstick and delicacy present a promise of solace. Camilla herself, meanwhile, is intrigued by the burning eyes of the trainee priest, which hardly ever leave her.

The guide is somewhat disdainful of them all. It is into his consciousness that we are first allowed a glimpse, on the second page of the book, after the obligatory topographical mise-en-scène has revealed these figures in their landscape.

Well, another's landscape, in fact. "The guide, perched between the priest and the quiet Englishwoman, attempted a speech of welcome; but he felt a tinge of unease. These people understood nothing of this land. Their baggage included chocolates and cosmetics and cellular phones. Didn't they realise that the stars appearing above them were different?"

A few lines later, and the point of view has switched to Robert - who, "staring across at Louis, guessed it was his second or third marriage. Josiane, in this confusing candlelight, looked half as real as he did."

It might be argued that this pass-the-parcel-very-quickly approach to narrative consciousness is the sign of a failure in prose technique; that readers need clearer indications of when the point of view is changing, or at least to stay "deep" in one or other of the characters for longer periods than single paragraphs.

Yet when one considers the scenario with which Thubron is presenting us, this choice of narrative method seems right. That strange sense of being in line on an expedition like this, part of a "team" yet pensively apart, could hardly be better conveyed. Even in simple positional terms, given that they mainly face each other's backs, dotting from one head to another seems the right approach. As if it is the howler monkeys in the forest canopy above which are testing each mind.

Soon enough, bodies are being tested as the journey takes its toll. Robert's knee swells up; Louis's heart "storms alarmingly" in its case of "too much flesh"; Josiane gets a fever. You know, soon enough, that someone in the line will fall ill. Or tumble down the mountain, or be chopped by the machete-bearing men who appear, impassive and threatening, across the travellers' path.

And then again, you don't know. Whenever you think the story is going one way, Thubron takes it another - unhooking, in the end, even the lure of the lost city itself, which "would never resurrect itself in the glistening surge of palaces which Robert had once playfully imagined".

Yet the Inca inheritance lives on in this book, as does the conquistador legacy. Its point is to sing the virtues of admixture, accepting that competing realities are central to the human condition. As Francisco reflects: "A human being is not pure...Only God is pure. A human being, like his ancestors, is made of parts."

· Giles Foden's new novel, Zanzibar, is published by Faber in September.